Hong Kong investors of Lehman Brothers minibonds have been offered up to 70 per cent of their money back, as banks and accountants make a final attempt to settle on a payout figure, marking the end of a four year debacle.

In 2008 the Wall Street lender's bankruptcy caused a slump in the value of the notes, triggering almost daily protests by Hong Kong buyers who claim they were missold. A reported 43,000 Hong Kong-based investors bought around $2.5 billion of Lehman minibonds, before the credit crunch took hold. Many investors were elderly, retired, or mentally unsound, claimed a report by the city's central bank published in 2009.

There has been widespread outcry that the distributing banks are not repaying enough, with the reaction from this latest announcement yet to be seen. Next month, investors will vote on the deal which needs 75 per cent approval to go through.

The thirteen Hong Kong banks which distributed structured notes from defunct investment bank Lehman Brothers have been working with trustee HSBC Bank USA, National Association, to recover the collateral tied up with the last remaining minibonds series 5 to 7 and 9, said receiver PwC in a statement.

The distributing banks are: Bank of China (Hong Kong), Bank of Communications Co, Hong Kong Branch, The Bank of East Asia, Chiyu Banking Corporation, Chong Hing Bank, Dah Sing Bank, Fubon Bank (Hong Kong), Industrial and Commercial Bank of China (Asia), MEVAS Bank, Nanyang Commercial Bank, Shanghai Commercial Bank, Wing Hang Bank, and Wing Lung Bank.

Unsurprisingly, said PwC, which was appointed receiver in 2010, the unwinding of the minibonds has not been straightforward, especially as the global financial crisis continues to rumble on.

If the minibond collateral was realized on the market now, investors would only get in the region of 30 per cent of the principal amount of the notes, said PwC.

However if investors choose to wait for repayment under the bankruptcy legal proceedings of Lehman, it is estimated that the distribution would take a number of years, to be spread in stages. As time goes by, the proportion of the principal that can be recovered is unlikely to be higher than PwC's estimates of 70 per cent of investors' money, less than the 70 per cent to 93 per cent originally mooted in 2009.

According to the repurchase scheme announced on 22 July 2009, the distributing banks made an offer to repurchase outstanding minibonds from eligible customers at a price equal to 60 per cent (for customers below the age of 65) or 70 per cent (for customers aged 65 or above) of the nominal value of the minibonds.

The banks also agreed to reimburse investors further if the value of the underlying collateral recovered reached the thresholds specified under the repurchase scheme. The banks offered to pay 10 per cent of the principal of the respective minibond series to eligible customers below the age of 65 who accepted the repurchase offer if the collateral recovered amounted to 10 - 70 per cent of the principal of the respective minibond series.

As the value of the minibond collateral recovered for minibond series 5 to 7 and 9 is not expected to exceed 70 per cent of the total principal amount, eligible customers who have received payments amounting to 70 per cent or more of their investment amount will not receive further payment under the repurchase scheme. Investors in the above bonds are likely to get less than those who had other mini bonds series.

In March 2011 the 31,000 who invested in series 10 to 36 got back as much as 96.5 per cent.

PwC said money would be paid at the earliest possible time.

"The distributing banks have continually worked hard and with the utmost sincerity, in addition to making a sizeable financial commitment, to reach a resolution for the Lehman Brothers incident," said PwC.

The fees of HSBC, PwC and their lawyers and agents will be paid first by the distributing banks, "to expedite the recovery of the minibond collateral," said the statement.